Terra Firma to share ownership with ex Sainsbury’s chief

Terra Firma Capital Partners has appointed Justin King, the former chief executive of J Sainsbury, as vice chairman and head of portfolio businesses, according to a statement from the firm.

As part of the appointment, King will take a share in Terra Firma, which is currently wholly owned by founder Guy Hands.

“We’re going to be extending the ownership of Terra Firma to certain senior people within the firm, and Justin will be one of those people who will get a percentage,” Hands told Private Equity International, adding that there will eventually be between five and 10 shareholders.

The decision to share ownership is not part of a succession plan; rather, it is a move to take Terra Firma “to the next level”, Hands said.

“As with all forms of entrepreneurial business, the way to bring people in and raise to the next level is to give people ownership,” Hands said. “I think what attracted Justin to come into Terra Firma was that he wasn’t going to be just sitting on the benches being used when we had a deal that made sense, he was actually going to be part of the management of the company and an owner in the company.”

Both Hands and King declined to comment on the size of the share King will hold.

Terra Firma is intending to raise a new buyout fund, with media reports suggesting the vehicle will target €2 billion.

Hands confirmed the plans to raise a fund, but declined to comment on the target size.

In February PEI reported that Terra Firma had committed capital of €1 billion for future deals. The capital is a mix of Terra Firma’s own funds and third-party money, and is available either to seed a fund or invest on a deal-by-deal basis.

Hands told PEI in June that Terra Firma would no longer charge fees on any uncommitted capital and that “at least 10 percent of our own money will be invested into any one deal”.

King was CEO of J Sainsbury from 2004 to 2014 and is credited with turning the retailer around. He will be taking a leadership role working with Terra Firma’s existing portfolio, as well as working with the firm on new opportunities.

“I said when I left Sainsbury’s I was looking for a role that was different from what I’d been doing, use my skills and experience with a full time role that also had a lot of variety in it,” King told PEI.

King said he had talked to many private equity companies during the last year as he has been searching for a new role.

“Two big things have to be true if someone like me is going to join a business like Terra Firma,” King said. “First you have to feel that you share a set of values with the people you’re going to be working with, and I felt that strongly with Guy in the time we spent together preparing for this.”

The second is having a shared philosophy regarding driving value in businesses.

“Of course the ability to financially structure in attractive and returns-enhancing ways is very important, but I’ve always believed – and I’ve made a career out of – changing businesses fundamentally and operationally is what really creates the value,” King said. “The fact that that is Terra Firma’s focus means it’s the right home for me because we share a view of how the greatest value is created in transforming businesses.”